How Central Banks Use Foreign Exchange Intervention

Episode 11 of Monetary Policy Explained with Fexingo digs into foreign exchange intervention — when central banks directly buy or sell their currency to influence the exchange rate. Lucas and Luna break down the mechanics using the Bank of Japan's 2022 yen-buying spree as a concrete case. They walk through how the BOJ sold U.S. Treasuries to raise dollars, then sold those dollars for yen, all to prop up a sliding currency. They compare sterilized versus unsterilized intervention, explain why the Fed rarely intervenes while emerging-market central banks do it constantly, and unpack the limits of this tool in a world of $7.5 trillion in daily FX trading. By the end, listeners will understand why currency intervention is like trying to fill a bathtub with a teaspoon — possible in theory, but you'd better have a very big teaspoon. No prior episode has focused exclusively on FX as a distinct policy instrument. #CentralBanks #ForeignExchange #CurrencyIntervention #BankOfJapan #Yen #MonetaryPolicy #Economics #FexingoBusiness #BusinessPodcast #Macroeconomics #BOJ #Fed #EmergingMarkets #Treasuries #SterilizedIntervention #FXMarkets #PolicyTools #GlobalFinance Keep every episode free: buymeacoffee.com/fexingo